Small businesses face challenges in Davis

On Thursday, a status update was posted on the Facebook page of Common Grounds Coffee, which read, “PLEASE SHARE: Our landlord has refused to renew our lease in favor of a Starbucks. We are suddenly homeless and our last day open will be Easter Sunday.”

Common Grounds was located in the Oakshade Town Center in South Davis for almost 13 years, according to co-owner Michelle Kim, who ran the business with her husband Son Chang.

“We’re in bad shape right now,” Kim said. “They only gave us seven days to evacuate because our lease will end this Thursday [April 4].”

According to Kim, the Oakshade Town Center is owned by Regency Centers, a nationwide property development company based in Florida who bought the shopping center from former landlord Paul Petrovich in 2011 for $35 million.

Regency Centers is “a proven developer of quality, high-performance shopping centers,” as stated on their website.

Kim said that negotiations with Regency regarding the end of their lease began in January, and options such as moving to a different location in the same center or elsewhere were proposed and considered by both parties. However, an agreement was not reached.

“Thirty days prior to the lease ending, we were contacting them, but they never returned my calls until Thursday and said we had to leave with only seven days notice,” Kim said. “They said they offered us several offers but we never took them, but we were looking to hear from them. They hung up on us.”

Starbucks?

It is unclear at present whether a Starbucks will actually be opening at Common Grounds’ location.

“We don’t have a deal currently signed,” said Gary Fields, senior regional property manager for Regency Centers. “There is no signed lease with Starbucks.”

Fields said he is unsure how word spread that a Starbucks would be opening in that location.

“Everyone is picking up and running with this, but we didn’t reach lease terms,” Fields said. “Not with Starbucks and not with anyone else.”

According to Fields, the location could potentially house a coffee chain retailer. But due to the lack of a signed deal, nothing is certain at the moment.

“We just couldn’t come to terms with them,” Fields said. “We have many tenants whose leases expire, and they move. It happens all the time. We really enjoyed their tenancy and it’s always sad when you can’t come to an agreement, but we want to do what’s best for the community.”

However, Kim believes that Regency Centers does not understand the community and the small businesses within it.

Other local businesses weigh in on rewards, setbacks

According to Dan Urazandi, owner of Bizarro World in downtown Davis, small college towns such as Davis offer certain advantages to small business owners, yet they are not immune from nationwide and global economic trends.

“Davis has unique elements, but it’s not that different,” Urazandi said. “The idea that Davis is a completely insulated and isolated community where the same economic standards ruling the rest of the country don’t apply here — that just isn’t true.”

Urazandi cited the economic downturn, the rise of online shopping and the increased presence of chain and big-box stores as just a few of the challenges faced by small businesses, both in Davis and across the nation.

“Malls have been cannibalized nationally by the big-box stores at least as bad as downtown [Davis] has been,” Urazandi said. “Most landlords would rather have a chain store. It’s more reliable for them. A landlord has an interesting job — they have to get the absolute most out of the businesses working under them without putting them out of business. They want to maximize everything they can get and sometimes they go a little too far.”

The high cost of rent in Davis is an additional challenge. Many Davis small business owners believe that the commercial real estate market in Davis, including rent costs, is heavily influenced by a “land oligopoly” situation in Davis, where a few people own a majority of the commercial real estate.

“There isn’t a lot of commercial real estate on the market,” said Dina Connor, owner of the Laundry Lounge in North Davis. “That drives the price up.”

The cost of overhead — the continuing expenses of operating a business — can also be quite high.

“Lots of folks dream of owning their own business but no one thinks of the intense difficulties associated with it,” Urazandi said. “People think we’re taking in a lot of money here, but so much is going to overhead. I know downtown businesses where the proprietor cannot even afford to hire.”

Urazandi also mentioned the loss of a town’s unique character that can result when the number of chain stores begins to exceed independent businesses.

“Chain stores have removed the character from just about every part of this country. You travel and see the same dreary landscape everywhere you go,” Urazandi said. “The weather might be different, but the human-created landscape is exactly the same. Davis is not immune to that.”

Nor is Davis immune to the departure of local businesses, such as Common Grounds. According to Kim, they hope to open again in three months but are unsure as to where they will be located, although they would prefer to stay in the South Davis location.

“We’ve been here 13 years,” Kim said. “It’s crazy what they were trying to do, how they treat us.”

MEREDITH STURMER can be reached at city@theaggie.org.